EXHIBIT 10.3
SECOND AMENDMENT TO CREDIT AGREEMENT
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THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment" or "Second
Amendment") has been executed as of the 1st day of July, 2006, (the "Second
Amendment Effective Date"), by INDIAN-MARTIN, INC., a Nevada corporation,
("Company"), and JPMORGAN CHASE BANK, N.A., successor by merger to BANK ONE,
NATIONAL ASSOCIATION, a national banking association ("Bank").
Recitals
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1. Company and Bank (collectively, the "Parties") are parties to
a Credit Agreement, dated as of September 5, 2003 (as in effect immediately
prior to the execution of this Amendment, the "Existing Agreement").
2. The Parties have determined that it is in their best interests
to amend the Existing Agreement, effective as of the Second Amendment Effective
Date, as set forth in this Second Amendment, and subject to the terms and
conditions of this Second Amendment.
Agreement
NOW THEREFORE, in consideration of the Recitals and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged by each of the Parties to this Second Amendment, it is agreed as
follows:
1. Definitions. Terms which are defined in the Existing Agreement
shall have the same meanings in this Amendment as are ascribed to them in the
Existing Agreement, as amended hereby, excepting only those terms which are
expressly defined in this Amendment, which shall have the meanings ascribed to
them in this Amendment.
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2. Amendments to Existing Agreement.
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(a) Amendments to Definitions. The following definitions, which
are set forth in Section 1.02 of the Existing Agreement, are amended and
restated in their entirety as of the Second Amendment Effective Date to read as
follows:
"Borrowing Base" means, at any date a determination thereof is made, an
amount equal to the sum of: eighty percent (80%) of the book value of
the Eligible Accounts plus one hundred percent (100%) of the Pledged
Cash, plus fifty percent (50%) of the outstanding principal balance
owed on the Escalade Note, less the amount of excess, if any, by which
the aggregate Eligible Accounts outstanding at any time from any
account debtor and its Affiliates exceeds fifteen percent (15%) of
aggregate Eligible Accounts on such date of determination; provided
however, that such concentration limitation shall not apply to Eligible
Accounts owed by Sears Roebuck, Inc. so long as its parent Company,
Sears Holding Corporation, is rated at least BB/Ba2, or better, on the
senior unsecured debt ratings established from time to time by S&P and
Moody's, respectively. For purposes of the Borrowing Base calculations
provided herein, the Parties acknowledge and agree that from time to
time there may be discrepancies (attributable to write-offs, incomplete
payments, returns, disputes, discounts and other assorted credit memo
balances) as to the amount of the Eligible Accounts shown by the
Company on the Borrowing Base Certificate and the consolidated total of
summary agings as to all Purchased Accounts Receivable which are
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prepared by each of the Escalade Domestic Subsidiaries, as servicing
agents for the Company, both of which reports are submitted to the Bank
as of the same date and are meant to define the same body of Eligible
Accounts at that point in time. The effect of such discrepancies is
such that the amount of Eligible Accounts shown on the Company's
Borrowing Base Certificate is occasionally and unwittingly shown to be
a greater amount than the amount to which Eligible Accounts then
actually total. The Parties agree that the Bank shall be authorized and
entitled to calculate the Company's Borrowing Base as of any given date
to the amount which is the lesser of (i) the amount of Eligible
Accounts shown by the Company on the Borrowing Base Certificate, and
(ii) the aggregate total of Purchased Accounts Receivable shown on the
summary agings prepared and submitted as of even date by the Escalade
Domestic Subsidiaries. Stated alternatively, to the extent that an
otherwise Eligible Account is subject to any claimed set-off, offset,
credit or other reduction right held by the account receivable debtor,
then for purposes of determining the Borrowing Base the amount of such
Eligible Account shall be reduced by the sum of all such claimed
offsets, credits and reductions to the extent not covered by the
Escalade Domestic Subsidiary, or Subsidiaries, that sold the Eligible
Accounts to the Company.
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"Maximum Availability" means as of the date any determination thereof
is to be made, the lesser of: (i) the Borrowing Base as of such date,
and (ii) the following amounts during the respective time periods
described:
First Amendment Effective Date
through September 30, 2006 $30,000,000.00
October 1, 2006 through October 31, 2006 $45,000,000.00
November 1, 2006 through November 30, 2006 $40,000,000.00
December 1, 2006 through December 31, 2006 $30,000,000.00
January 1, 2007 through January 31, 2007 $25,000,000.00
February 1, 2007 through June 30, 2007 $20,000,000.00
July 1, 2007 through September 30, 2007 $30,000,000.00
October 1, 2007 through October 31, 2007 $45,000,000.00
November 1, 2007 through November 30, 2007 $40,000,000.00
December 1, 2007 through December 31, 2007 $30,000,000.00
January 1, 2008 through January 31, 2008 $25,000,000.00
February 1, 2008 through Scheduled Maturity Date $20,000,000.00
"Scheduled Maturity Date" means June 30, 2008 or such later date as may
be established pursuant to the terms of Section 2.01(d) of this
Agreement.
"Revolving Note" has the meaning ascribed to it in Section 2.01(b) of
this Agreement which Revolving Note shall be in form and substance
substantially the same as Exhibit "I" attached to the Second Amendment.
(b) New Definitions. Section 1.02 of the Existing Agreement is
hereby amended, effective as of the Second Amendment Effective Date, by adding
thereto in appropriate alphabetical sequence the following new definitions:
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The term "Second Amendment" means the Second Amendment to Credit
Agreement, dated as of the Second Amendment Effective Date, executed by
and between the Parties.
The term "Second Amendment Effective Date" is used as defined in the
Preamble of the Second Amendment.
3. Representations and Warranties. Company represents and
warrants to Bank that:
(a) (i) The execution, delivery and performance of this Amendment
and all agreements and documents delivered pursuant hereto by Company have been
duly authorized by all necessary corporate action and do not and will not
violate any provision of any law, rule, regulation, order, judgment, injunction
or writ presently in effect applying to Company, or its articles of
incorporation, or result in a breach of or constitute a default under any
material agreement, lease or instrument to which Company is a party or by which
it or any of its properties may be bound or affected; (ii) no authorization,
consent, approval, license, exemption or filing of a registration with any court
or governmental authority, department, agency or instrumentality is or will be
necessary to the valid execution, delivery or performance by Company of this
Amendment and all agreements and documents delivered pursuant hereto; and (iii)
this Amendment and all agreements and documents delivered pursuant hereto by
Company are the legal, valid and binding obligations of Company, as a signatory
thereto, and are enforceable against Company in accordance with the terms
thereof.
(b) After giving effect to the amendments contained in this
Amendment, the representations and warranties contained in Article III of the
Agreement are true and correct on and as of the Second Amendment Effective Date
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with the same force and effect as if made on and as of the Second Amendment
Effective Date, except that the representation in Section 3.01(d) of the
Agreement shall be deemed to refer to the Financial Statements of Company most
recently delivered to Bank prior to the Second Amendment Effective Date.
(c) No Event of Default has occurred and is continuing or will
exist under the Existing Agreement, as amended hereby, as of the Second
Amendment Effective Date.
4. Conditions. The obligation of Bank to execute and to perform
this Amendment shall be subject to full satisfaction of the following conditions
precedent on or before the Second Amendment Effective Date:
(a) Copies, certified as of the Second Amendment Effective Date,
of such corporate documents of Company as Bank may request evidencing necessary
corporate action by Company with respect to this Second Amendment.
(b) This Amendment and the replacement Revolving Note shall have
been duly executed and delivered by Company to Bank and this Amendment executed
by Bank.
(c) Bank shall have received such additional agreements, documents
and certifications, fully executed by Company, as may be reasonably requested by
Bank.
1. Waiver of Default. Bank hereby waives as of the Second
Amendment Effective Date, Company's default with respect to the financial
covenant set forth in Section 5.01(h)(3) of the Existing Agreement which
requires Company to at all times maintain a delinquency ratio with respect to
outstanding Eligible Accounts whereby not more than 10% of such Eligible
Accounts remain unpaid after sixty (60) days after the original payment due
dates shown on the underlying invoices. [Such default was evidenced on Company's
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Borrowing Base Certificates dated as of February, March, and April, 2005, which
showed delinquency ratios of 16.11%, 11.25%, and 10.61%, respectively.]
2. Supplemental Documents and Further Assurances. Company shall
at any time on or after the Second Amendment Effective Date, and upon the
request of Bank, execute and deliver, or cause to be executed and delivered,
such additional documents, agreements and instruments as may be reasonably
required by Bank or appropriate to give full force and effect to the intents and
purposes of this Amendment and the Agreement. Company's failure to comply with
the terms of this Section 6 within thirty (30) days after Bank's request shall
at Bank's sole discretion and election be deemed an Event of Default under
Section 7.01 of the Agreement.
3. Binding on Successors and Assigns. All of the terms and
provisions of this Amendment shall be binding upon and inure to the benefit of
the Parties and each of their respective successors, assigns and legal
representatives.
4. Governing Law/Entire Agreement/Survival. This Amendment is a
contract made under, and shall be governed by and construed in accordance with,
the substantive laws of the State of Indiana applicable to contracts made and to
be performed entirely within such state and without giving effect to the
conflicts of laws rules or principles of any jurisdiction. This Amendment
constitutes and expresses the entire understanding between the Parties with
respect to the subject matter hereof, and supersedes all prior agreements and
understandings, commitments, inducements or conditions, whether express or
implied, oral or written. All covenants, agreements, undertakings,
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and shall not be affected by any
investigation made by any Person. Except as expressly provided otherwise in this
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Amendment, the Existing Agreement, as amended hereby, remains in full force and
effect in accordance with its terms and provisions.
5. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AMENDMENT HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.
6. WAIVER OF SPECIAL DAMAGES. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, COMPANY SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST
BANK, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN
CONNECTION WITH, OR AS A RESULT OF, THIS AMENDMENT OR ANY AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY, THE TRANSACTIONS, THE TERM LOAN OR THE USE OF
THE PROCEEDS THEREOF.
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IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly
executed and delivered by their respective duly authorized signatories as of the
Second Amendment Effective Date.
INDIAN-MARTIN, INC., JPMORGAN CHASE BANK, N.A.,
a Nevada corporation successor by merger to
BANK ONE, NATIONAL ASSOCIATION
By: /s/ TERRY D. FRANDSEN By: /s/ JOHN OTTESON
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Terry D. Frandsen, VP Finance & CFO John C. Otteson, Vice President
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(Printed Name and Title)
("Company") ("Bank")
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